One of the best ways to save money is to first start off by having a savings account. This allows for you to easily accumulate money from working at a job or from your allowance. I personally save my money earned from housework, birthday gifts, and allowances. After you build up a good amount of money that you won’t need to use in the next few years, you could invest it into stocks and bonds and try to earn a better return. Over the long term, stocks historically have generated returns greater than 10%, so it makes sense to have it in stocks rather than a savings account, which usually only returns about 2% yearly. Over 20 years, having $1,000 in a savings account will only give you $1,486 at the end, while in stocks, with a 10% average annual return, you'll end up with $6,727. This is a stunning difference and should make you think about putting your money to work for you. The downside of investing in stocks is that it is much riskier than keeping your money in a savings account and there is the potential to lose some, or even all (this is very unlikely), of your money.
The most efficient and easiest way to invest your money is to just buy an index fund or a mutual fund. This means that professionals will pool all the money from you and other investors and invest it into a diversified group of stocks and bonds, which will be less risky than buying a single stock.
Money Smart Kid